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5 Top Lessons From LAWTrust To Prepare For Super-Charged Growth

Christi and Maeson Maherry took their R103 million business to a turnover of R198 million in just 15 months. How? With a strong vision, the right foundations in place.

Nadine Todd

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Christi Maherry and Maeson Maherry

Vital Stats

  • Players: Christi Maherry and Maeson Maherry
  • Company: LAWTrust
  • Est: 2006
  • Turnover: R198 million
  • What they do: Digital information security solutions
  • Team: 90 people, 28 of whom are developers and security engineers
  • Visit: www.lawtrust.co.za

When Christi and Maeson Maherry launched LAWTrust in 2006, they had a grand vision: They wanted every person in South Africa to have a digital ID. With the launch of the national ID card in 2013, they achieved that vision.

But here’s the thing about a grand vision. First, no goal can be achieved without laying specific foundations and building blocks. When the tender was awarded to LAWTrust by the Department of Home Affairs, they had just six weeks to implement. Christi and Maeson’s international product partners said it couldn’t be done — that no national project of that scale had ever been completed in six weeks.

“The rollout was scheduled for Nelson Mandela Day, and we couldn’t miss our deadline. We had to deliver,” says Christi. “If we had won the tender when we launched in 2006 we wouldn’t have been able to meet the deadline,” adds Maeson.

“But we had spent seven years working on our core competencies, systems, processes and products. It was still a massive project, but we’d built up the internal competencies to pull it off. You have to systematically prepare for growth.”

Second, successful companies are built because they get into the market and they start trading. Elon Musk’s ultimate goals are to build solar roofs that seamlessly integrate battery storage; to expand his electric vehicle product line to address all major segments; and to develop a self-driving solution that is ten times safer than manually operating vehicles.

Related: AutoTrader South Africa’s George Mienie Knows Disruptive Innovation Is More Than Shifting Gears

To get there, he’s built the Tesla: A low-volume, expensive and exclusive car. That product range is funding a medium volume car at a lower price, which in turn will fund an affordable, high volume car — which will fund his ultimate goals.

The point is that you need to be in the market. You need to build solutions that customers will pay for and that bring in revenue, but also allow your business to grow and develop.

For LAWTrust, those solutions were built for the banking sector. When the opportunity to tender for the national ID card project came up, it was the culmination of Christi and Maeson’s vision — but under no circumstances could it be achieved at the expense of their existing client base.

And finally, what happens once the grand vision is achieved? Truly innovative companies that achieve market longevity are able to look beyond their own goals to the next ground-breaking vision. You need to simultaneously live in the future and in the here and now.

Here are the top five lessons Christi and Maeson have learnt while building their business.

1Develop principles you believe in

LAWTrust

LAWTrust was launched because Christi and Maeson wanted to focus on cyber-security within the digital space, as well as digital identities and authentications.

They were both working in the crypto space, but wanted to create something of their own, and so they found a partner who would bankroll the business in exchange for a solution that allowed for the authentication and protection of digital contracts in the legal sector.

Unfortunately, the solution ultimately needed local laws to change, a factor they hadn’t considered and which was taking much longer than expected. But it gave the business a platform from which they could build encryption solutions for other sectors, most notably the banking sector.

In a nutshell, LAWTrust authenticates ‘safe’ websites, and provides user protection once you are in those websites, so that your details cannot be accessed by anyone else. These solutions work for Internet sites as well as Intranet sites, and have been extended to create personal, life-long digital IDs through the new national ID cards.

But the success of these solutions has stemmed from a set of core principles, rather than specific tech solutions.

“You need to develop a set of principles that you believe in, and then find a way to deliver solutions based around those principles,” says Christi.

“For us, identity is the key to security. How you prove identity may change, but the principle is sound, and that’s been imperative to how we develop solutions.

Related: 7 Lessons Elevator Learnt When Partnering With Their Competitor For Next Level Growth

“We’ve always believed in PKI — public key infrastructure — which is a set of roles, policies and procedures that create, manage, distribute, store and revoke digital certificates and manage public-key encryptions. Ten years ago, Gartner said PKI was dead. We disagreed. Not because we were married to one set of tech or solution, but because we held to our core principles, and believed that PKI was the best way to deliver on those principles. We spent a lot of time convincing our clients of this fact, until Gartner ultimately retracted their statement.

“We agree that you can’t be married to your solution. The next interesting tech is blockchain. If we ignore this, we may no longer be the niche experts in this field in the future. But we also really believe that the principle comes first — the method of delivering the solution based on that principle is secondary.”

For Maeson, this isn’t just true of technology companies, but all businesses across sectors and industries. “In the late 1800s and early 1900s the primary mode of transport was wagons. A company whose name and products only focused on wagons was left behind once the automobile was invented. A company whose name and products focused on transport solutions, however, could move with the times. It’s all about how you view your business and your product. Are you in the business of producing horse harnesses, or are you in the business of helping people get from point A to point B? Your view will determine the company’s focus, and how agile you are.

“This has been the cornerstone of how we view our place in the market. We provide digital identities that protect personal and company information. How we do that might change over time, but the principle remains the same.”

2Be courageous in everything you do

lawtrust-owner

Christi is no stranger to courage. In fact, her personal motto is that you should invest everything you have in the journey. “No guts, no glory,” she laughs.

“I was the first female in South Africa to complete the VIP protection course for the National Security Agency, and it was because I wouldn’t take no for an answer. I got to serve the President. I was on his protection detail. I met Barbara Bush in the White House, and was assigned Prince Philip’s protection detail when he visited South Africa. You need to know what you want and go for it — and the beauty of it all is that courage is a habit that you can build and repeat.”

It might be Christi’s personal mantra, but it’s the cornerstone of the business she and Maeson have built together as well. “If your executive judgement is sound, then you have a solid business,” says Maeson, whose background is in electronic engineering.

“Business is all about accepting certain levels of risk. If you’re focused on growth, you spend most of your time in unchartered territory. This often means taking on big tasks and figuring them out along the way.”

While Maeson is naturally more cautious than Christi, the partnership works well. Christi’s focus is on the future, and she’s always ready and willing to blaze ahead, while Maeson requires data to plot their course and growth plans. Together, they balance out, and with an agreement in place that courage is a necessity, and that risk is inherent in business, they walk the line between focusing on big, hairy, audacious goals (BHAGs) and putting the necessary systems and processes in place that will get them there.

“If we didn’t have this mentality we would never have pitched for the national ID card project,” says Maeson. “But without Maeson’s systems — and his entire team’s willingness to work 20-hour days for six weeks straight, we wouldn’t have delivered,” adds Christi.

Being courageous goes beyond just taking business risks though. It’s also about having courageous conversations with your employees and customers.

“Some of the most intimate customer relationships we’ve built have started with a problem, which we gave 110% to fix. This is the foundation for a fantastic relationship — but not if you aren’t honest,” says Christi.

Related: 10 Lessons From Andrew Brand On Shaping Organisational Success

“Always be honest; don’t say that you have a solution when you don’t. Rather tell clients that the issue is tougher than you assumed and you need another week to find the solution. There’s a temptation not to communicate with customers while you fix a problem, but we’ve learnt that there’s no such thing as over-communication. People feel secure when they have all the facts. It’s not always easy to be this transparent, but it’s essential to successful relationships built on trust.”

3Owning your niche creates defensibility

south-african-entrepreneurs

One of the key areas investors evaluate businesses on is defensibility: How difficult is it for competitors to come into your market and encroach on your market share?

Maeson and Christi have concentrated on three key factors to ensure defensibility in their market. The first is that although they stick to a niche within PKI and crypto solutions, they work across multiple industries and sectors.

“We follow a strategy of never playing in only one sector,” says Maeson. “We have a base of solutions that we tweak according to industry-specific needs. This means that we aren’t reliant on the success or growth of any one sector.”

This strategy was developed on the back of LAWTrust’s first big failure, which was developing a product for their first clients and investment partners that could not be implemented because the law lagged behind the solution.

“On spreadsheets, the business model looked great,” says Maeson. “What we didn’t take into account was that the business plan involved changing the law, and you can’t put a timeline on that.”

Christi and Maeson didn’t let this early failure deter them. “We are security specialists and we knew that our vision was rock solid,” says Christi. “The first product didn’t work, but it gave us the building blocks for three other products. We were trying to solve the fact that legal contracts have to be sent via registered mail. We created an encrypted mail solution, which established building blocks for a number of other solutions. The product didn’t work, but it created a great start for the company.”

Both Christi and Maeson considered themselves to be PKI visionaries, and so they unbundled the first product, and repackaged it into three different solutions that were not industry-specific.

“We convinced our shareholders to continue this journey with us, and we made the decision to create solutions that worked across sectors and industries going forward,” says Christie.

Two years later, in 2008, LAWTrust signed its first banking client. “Specialists can go up against giants,” says Maeson. “We knew we didn’t want to be small generalists. This isn’t a defensible business model but being very specific niche experts is a different ball game. We can’t be commoditised by larger companies, and we aren’t really competing with them. Instead, we’re the OEM experts that large integrators use when they’re delivering on a project.”

Maeson and Christi both believe that specialising in an area offers protection. “We have 90 people working for us who are all crypto experts,” says Christi. “Someone who is passionate about this field will come and work for us, because it makes up 100% of their job instead of 10% or 20% at a large IT firm. This means we have the best in the field working for us, and we’re completely focused, putting us at the top of our game.”

Related: How An Accidental Entrepreneur Founded A R175 Million Business

LAWTrust’s core focus is on customer success, which requires exceptional customer service. “Everyone says customer service is their key differentiator, but for us it’s a non-negotiable if you’re building a defensible position,” says Christi.

“Substantial deals have come from answering the phone at 10pm on a Friday night to help a client out of a jam. We know that if banks or the Department of Home Affairs aren’t delivering, it’s our fault. Protecting them is our number one priority. I would rather be disturbed at 2am than hear the next morning on 702 about long queues outside Home Affairs.”

This focus on customer success shines a light on your sector, which in turn attracts competitors to your space. Christi and Maeson understand that this is the cost of doing business, and that it makes creating a defensible position an ongoing process, rather than a once-off.

“The best defensibility is to know what you’re doing and to enjoy doing it,” says Christi. “If you’re passionate about what you do, you’ll naturally put in 120%. You’ll shine and attract the best people. This will in turn drive you to deliver exceptional service, which will give you a strong track record. We have incredibly strong references. Any new players to the market will find it difficult to compete with the level of delivery we’ve achieved.”

4Lay the foundations for growth

christi-lawtrust

It’s never too early to start laying the foundations of growth. “When the opportunity for a large contract comes along, and you put yourself and the business out there, you need to have scaled the business already,” explains Maeson.

“To even win the deal in the first place you need to prove you can implement and support your idea. We’ve learnt that ‘overnight’ successes are actually ten years in the making. They take a vision, and a roadmap of how you’re going to get there.”

This is true of everything LAWTrust has done since its launch, but can be seen in action in the national ID project. “The ID card tender was ten years in the works,” says Christi.

“It came up a few times without successful contenders securing the project. Then the last time it came up there was a digital component. We had spent a few years in the market, had developed a reputation for delivery, and we had the product. The timing was right for both of us — we had a solution that matched their need, and we were confident we could deliver in the extremely tight timeframe.”

Christi and Maeson had a grand vision — but on the ground is where you make grand visions work. “The heavens don’t magically open after 18 months in business,” says Maeson. “We knew where we wanted to go, and we had to figure out the best path to get there. We needed to do the time. Our entire business is based on trust, integrity and security. There are no short cuts to this. We needed to develop the right products and build a reputation, and that takes time in the market, and an unwavering focus on delivery.”

Maeson has focused on developing two different sets of products: Commodity products that are cash generative, because they offer annuity (subscription) income, and can be housed in the cloud or on client premises. These solutions are developed with international partners; for example, LAWTrust is the Entrust partner in Africa, and has Adobe and Microsoft international accreditations.

Maintaining these requires annual three-month audits from KPMG, and solutions are built onto international products to integrate into existing systems. On the whole, they are subscription based, which frees the team up to develop specialist solutions, like the national ID project.

“These have a much longer sales cycle, and so we need the mix of both commodity and specialist projects to make our business model work,” says Maeson.

These solutions can be deployed anywhere in the world, and this has opened an additional revenue stream for LAWTrust in international markets. Moving into international markets also hedges currency risks.

“Every company around the world has a digital strategy. We can provide the trust that clients need to feel comfortable sharing their information online for any business, anywhere in the world,” says Christi.

Interestingly, sometimes part of the growth journey is to not grow. This happened to LAWTrust after the implementation of the national ID Project.

“The project took six weeks to implement, and during that time we communicated regularly with our banking clients. It was a huge project that required an enormous amount of our team’s focus, and we needed to ensure that they didn’t feel abandoned by us,” says Christi.

LAWTrust’s clients understood their constraints, and because the solutions they employ are subscription-based, managed PKI solutions, they continue operating without LAWTrusts’s express focus.

This is one of the challenges of growth. You need to have scaled to be able to handle a project of this magnitude, but you can’t double your team overnight. You need to deliver with what you have. Many companies fall short when they’re trying to scale because they either over-spend in preparation for a large project, or they can’t invest in the growth needed to deliver the project.

In LAWTrust’s case, Maeson’s team worked day and night to deliver, with the understanding that it was short-term only. Thereafter, the business knuckled down and focused on ensuring all the systems, processes and teams were in place to handle the new contracts.

It’s for this reason that there was almost no revenue growth between 2013 and 2015, but the business then doubled its turnover in 2016, taking it from R103 million to R198 million in 15 months.

“Revenue growth is good — it’s the focus of all high-impact, growing businesses,” says Maeson. “But it cannot be the be-all and end-all of what you’re doing. We needed to consolidate the business and ensure our foundations were ready for the next level of our growth before we embarked on it. Once we had everything running seamlessly we could start focusing on growth again — with a large focus on international markets.”

5Never stop learning

Christi and Maeson

Christi and Maeson have a strong belief that great businesses are built when you attract — and retain — the right people. There’s a strong leadership component in talent management however, not just from the perspective of managing your teams, but in having the ability to step back and give your upper management the freedom to make decisions and take ownership of their roles.

“When you give people the opportunity to do their thing, you’ll build a better business — provided you have the right people on board,” says Maeson.

Interestingly, this ties in with the two founding partners’ focus on self-development as well. “We’re continuous learners,” says Christi. “

You can’t step away to focus on your personal growth and business acumen if you’re always working in the business, and without that growth you can’t adequately work on the business. To do both, you need to trust your team to continue with the day-to-day operations.”

Christi and Maeson have both taken numerous executive courses. Christi started with the Management Advancement Programme (MAP) at Wits Business School, which ignited her renewed love of learning.

“I realised the value that ongoing learning adds to my business and myself,” she says.

This was followed by programmes at EY and even Stanford. Maeson is completing his PhD, and has also completed online courses through Stanford. They also regularly attend international conferences in their sector.

“Our aim is to globalise, and to do that we need a broader view of international markets and challenges, as well as a global network. These courses help us achieve that goal and set up new channels, and give us insights into different cultures and drivers,” says Christi. “They also help you leapfrog your organisation,” adds Maeson.

“Why make the same mistakes that other businesses make when you can learn from them? Business theories and case studies have been invaluable in our growth and understanding of our business. We’ve laid the foundations for global growth because we’ve focused on getting all the right elements in place — and that includes ourselves and our own knowledge base.”

Lessons Learnt

Courage is a habit. Get into the habit of holding courageous conversations with staff and customers.

Business is about accepting certain levels of risk. If you’re focused on growth, you spend most of your time in unchartered territory. Take big bites and then focus on figuring it out.

Fail fast. This is crucial. Business and technology are changing all the time and you need to change with them. You’ll make mistakes — that’s okay. Just make them quickly so that you can learn and move forward.

Believe in principles, not a solution. Solutions — and how they’re deployed — change. Make sure you have a set of principles at your core; how you package those solutions shouldn’t be at the centre of your business.

Focus on operating costs first. We’ve done this with our annuity income streams, which has enabled us to focus on specialist projects.

To scale, scale people. This is where the real growth happens — with your people and what they can deliver. Be transparent with them, support them, help them to grow and develop. Great teams build incredible businesses.

Have foundations and sub-strategies. For us, the foundation is to remain a niche and specialist provider. However, we have very specific growth plans that require sub-strategies. These are to diversify our product offering, build our people, and balance our currency earnings. We’re cost-effective and highly skilled, which is a good combination for international growth.

Build partnerships based on trust. This is essential across the business, from client partnerships, to teams, to the founding partnership. We are very different people with specific skill sets, and we approach ideas from different perspectives. It’s important that we trust that our goals are the same, and we’re arguing about the best way to get there. Ultimately, we know that each argument is in the best interests of the business, and that’s the result of trust.

Building a high-growth organisation takes time. So put in the time. Don’t expect instant traction. The best businesses are built on solid reputations and referrals, and those take time to develop.

Always be honest. Be honest with your staff and your customers. Don’t take the easy road and be quiet when you’re solving a problem. Rather let everyone know where you — and they — stand.


Key Insights

Sometimes you need to go slow if you want to grow    

From 2006 to 2015 Christi and Maeson Maherry built a R103 million business. They then almost doubled their turnover to R198 million in 15 months. This was because they focused on building solid foundations, and then integrating new client projects and employing the teams needed to run those projects, before focusing on next-level growth.

The best defence is a good offense          

There will always be competitors entering your market. The best way to ensure a defensible position is to always be looking ahead, maintaining an innovative mindset, and securing a niche position within your field. No matter what, you want to be the subject matter expert in your field.

Principles come first, solutions second   

How you deliver a solution changes with the times. Technology changes, and you don’t want to be left behind when it does. What is your core? What do you do? This is step one. How you deploy your solution is step two.

Nadine Todd is the Managing Editor of Entrepreneur Magazine, the How-To guide for growing businesses. Find her on Google+.

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Entrepreneur Profiles

4 Lessons From The Pivotal Group Founders On Growing And Disrupting All At Once

Here’s how they’ve built what they believe to be the foundations of a successful group of businesses in five years.

Nadine Todd

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paul-hutton-joel-stransky-and-bruce-arnold-of-pivotal-group

Vital stats

  • Company: Pivotal Group
  • Players: Paul Hutton, Joel Stransky and Bruce Arnold
  • What they do:  Pivotal pioneered voice biometrics in the financial and telecommunications market. Over time, the company has grown to include nine divisions across multiple sectors.
  • Launched: 2012
  • Visit: pivotalgroup.co.za

How do you build a disruptive business while also focusing on growth? Disruptive ideas are by definition new and unknown to the market. They defy traditional and established solutions and ways of doing business, and they require the market to be educated before you can really onboard clients or even sell your product or service.

The answer is to build parallel solutions: Business units that bring in revenue while the more disruptive ideas are being developed and introduced to the market. Here are the four top lessons the founders of the Pivotal Group have learnt while building their business and pursuing disruptive opportunities simultaneously.

1. Know who your competitors (and potential competitors) are

Great ideas that are economically viable and solve a need that consumers are willing to pay for are few and far between. Great ideas alone are a dime a dozen, but if you’ve spotted a need, chances are someone else has as well. You then need to step back and critically evaluate why someone else hasn’t done this before; if they have done it and they’ve failed; or if you’re entering shark-infested waters riddled with competitors.

Once you’ve determined there is a gap in the market, you need to evaluate who your potential competitors are, and the impact if they suddenly started offering a similar solution to the market.

For Paul Hutton, Bruce Arnold and Joel Stransky, the founders of OneVault, competition was always a factor, particularly as a start-up, and given that potential competitors included Bytes and Dimension Data, this was a very real factor to consider. After careful analysis, however, the founders decided to go for it. Their differentiator was their business model. They wouldn’t be selling OneVault as a software solution, but as a service.

Related: Which Of These 7 Personality Traits Do You Share With The World’s Richest People?

The idea had taken root while Paul was still CEO of TransUnion Credit Bureau. “I came across voice biometrics in Canada. There’s been a surge in identity fraud around the world, and I really understood the value of voice recognition as a verification tool,” he explains. “It can’t be faked, and it’s the only remote biometrics solution available, because you don’t physically need to be there to verify yourself.”

Paul had presented the idea to Transunion’s global board, and while they were intrigued, nothing came of it. “TransUnion’s model is to buy companies that are experts in their specific fields, not launch a new disruptive division from scratch.”

But this meant there was an opportunity for Paul to pursue the idea independently. Joel (former MD of Altech Netstar and CEO of Hertz SA) and Bruce (formerly Group CFO of TransUnion Africa and CFO at Unitrans Freight) were immediately interested in partnering with Paul. Both wanted to pursue entrepreneurship, although neither could do so immediately. The commitment was enough for Paul to get directly involved and start working on the business while he waited for his partners to join him.

In January 2011, Paul and Joel travelled to the UK and started investigating voice biometric solutions. “Voice biometrics was fairly new, but good technology was available, and there were global leaders in the sector,” says Joel.

It was important to choose the right product for the South African market, as this would form the basis of their offering. A contact at Dimension Data (one of whom became an investor in the business) offered this simple and straightforward advice:

When you’re choosing a technology partner, go with the company whose tech you’re confident in, and whose leadership is stable. You’re basing so much on this company and their longevity, so don’t disregard this criteria.

For Paul, Joel and Bruce, a US-based company, Nuance, ticked those boxes. But, from a competitive perspective, OneVault wasn’t the only potential player in the market. “Neither Bytes nor Dimension Data had gone into voice, but they had the potential to do so,” says Bruce. “The products were available to them through their partners.”

To mitigate this very clear risk, the founders made two critical decisions. “Our intention was to sell voice biometrics as a service, instead of a software solution that customers bought and owned, with the necessary infrastructure to go with it. The idea for OneVault was that there would be one place where your voice print lived, and different businesses could plug into our solution.”

The business model of large technology players in South Africa is to sell integrated software solutions, so OneVault’s business model was a differentiator. The next differentiator Paul, Bruce and Joel focused on was becoming specialists in their field.

“This is Paul’s baby,” says Bruce. “We’ve needed to build up a niche, expert team that specialises in voice biometrics. Because we aren’t generalists, 100% of our focus goes into this, instead of 5% or 10%.”

To attract the best in their fields, the founders needed a very appealing culture and a strong recruitment strategy. “We focused on what we wanted from our work environment, and then applied the same rules across the business,” says Joel. “Our goals were to drink good coffee, have no leave forms — ever; be able to take the time to ride our bikes and watch our kids play sports. If someone can’t make it work, or takes advantage without putting in the work, they come and go, but on the whole, we’ve had extremely low churn, and we’ve attracted — and kept — incredible talent.”

This differentiator would prove to be important for two reasons. First, two and a half years into the business, with investors on board and having pumped a significant amount of their own capital into the business, the team hit a major stumbling block. For a few weeks, they didn’t even know if they had a business.

“We had been operating on one major, and as it turned out, faulty, assumption,” says Paul. “We thought South African companies had the right telephony structure to implement our solution. We’d been building our solution on top of Nuance’s software, and were ready to start piloting the entire system with a few key customers, and we found out that in order to meet global voice biometric standards, the telephone technology had to be G711 compliant. South Africa was operating on G729.”

This was OneVault’s make or break moment. The team had six weeks to come up with a solution that ensured it met the necessary levels of accuracy. Without a highly skilled team this would have been impossible.

Even as a start-up, the strategy had been to only bring the best of the best on board. “We didn’t interview,” says Bruce. “We approached people whom we knew. We approached the best in the industry, and convinced them to take a chance with us. There was risk, but there were also rewards.” One of those people was Bradley Scott, a brilliant engineer whom both Paul and Bruce had worked with at Transunion.

Today, OneVault is one of the most specialist companies in the world, and often asked to speak at events in the US.

Being the niche specialists paid off, and OneVault achieved the almost impossible. But this had its downside.

Once you’ve shown something can be done, the bar of what’s impossible moves. Competitors enter your space.

This was the second reason why being such focused, niche experts paid off. “We demo’d the solution for a large local corporate, they loved it, and then went to a ‘then’ competitor  to implement it,” says Paul.

“We always knew this was a real danger. Players like Bytes and Dimension Data have solid, existing client relationships with the same companies we’re targeting.”

18 months later the project still wasn’t working. “This is deep specialist knowledge,” says Paul. “Knowledge we built while we created our offering.” OneVault won the contract, and developed a partnership with Bytes at the same time. Today, OneVault works with all the major software integrators in the market. “We’re a specialist service they can offer their clients, without needing to put the same time and energy we needed to put in to become the specialists.”

Through a focused strategy, OneVault has become a partner, rather than a competitor, of some of the largest players in the industry.

2. Understand the nature of disruption so that you can prepare for it

pivotal-group

In today’s ever-changing and fast-paced business world, most business experts are in agreement that as a company, you’re either the disruptor, or you’re being disrupted. The problem is that disruption comes with its own set of challenges.

“Our entire business model was built around a subscription service. Instead of a company buying a software solution, installing it and running it internally, we would do all of that. We would carry the infrastructure burden, and the high upfront cost,” says Joel.

In theory, this sounded like a clear win for businesses that would benefit from a voice biometrics solution. The reality is never so simple, particularly when you’re a disruptor.

“The software is expensive, and so we thought this would be seen as an excellent solution,” says Paul. “Instead, we faced a lot of reticence over the cloud. Businesses didn’t trust it yet.”

On top of that, first movers are often faced with a lag in corporate governance guidelines. As technology becomes more sophisticated, so governance guidelines change — but it’s a slow process, and the lag can impede disruptors.

“You also can’t give proper reference cases, because it’s all brand new to your market,” says Paul. “The best we had was a case study of how well it had worked in Turkey.”

To compound matters, proof of revenue is essential for businesses wanting to trade with large corporates, but non-existent in the start-up phase.

So, what’s the solution? According to Joel, Bruce and Paul, it’s all about being patient, never giving up, building gravitas and getting a few clients on board, even if it’s free of charge to build up your reputation and prove your concept. Finally, you need to bring in revenue from more traditional channels to support your disruptive products and solutions.

“Disruptive solutions are by their nature new and different, which means change management for your customers. This makes the sales cycle long and complex, and you have to be prepared for that,” says Bruce.

Don’t stop laying your groundwork. While disruptors are ahead of the curve, you need to be ready for the uptake when it arrives. “We’ve now concluded a partnership with South Africa Fraud Prevention Services,” says Paul. “When an imposter calls we won’t only  terminate the transaction but we will alert the identity being compromised in the attempt and we will actively prevent fraud by contacting Fraud Prevention. The ultimate vision is for every South African’s voice biometric signature to live in our vault, and we are already receiving imposter information.”

3. Cultivate additional revenue streams

So, what do you do while you are living through the extremely long sales turnaround time of your disruptive, game-changing solution? Bills still have to be paid and investment is needed to develop truly disruptive ideas.

First, the team realised that while an annuity subscription service was their ultimate goal and where the industry was heading, initially they needed to be able to sell and implement the software.

It’s worth noting that one of OneVault’s earliest customers who bought the software has since launched a new business, which is on OneVault’s annuity service model. The shift has just taken time. “The change is happening, but it’s been slower than we anticipated,” says Bruce. “We needed to accept that fact and sell the software to bring revenue into the business while we were waiting for the market to catch up.”

It’s an important lesson. You don’t want to get distracted from your vision, but you need to be bringing in revenue, even if that means your short-term strategy differs from your long-term goals.

“It took three years before we really started seeing a move towards hosted solutions,” he adds. “Outsourced and offsite solutions are opex environments, not capex. They are more cost-effective for customers, but they require a shift in thinking. It’s a move away from how things have always been done, and that takes time.”

But, while Paul, Bruce and Joel were learning the art of patience, they also needed to start bringing revenue into the business.

Related: 8 Inspirational Quotes From Movie Mogul Steven Spielberg

“It was clear that we needed to find other opportunities,” says Joel. The result is the Pivotal Group, a diversified holding company with different businesses that are interlinked and complementary.

The group’s first business outside of OneVault, Pivotal Data, was based on a large call centre contract Joel, Paul and Bruce secured. “You can’t be an expert in everything – when you specialise you will always be more successful. The trick is to partner with other experts,” says Joel. In this case, three entrepreneurs were opening a call centre — this was their area of expertise; they were absolute subject matter experts. What they weren’t experts in was technology or facilities management. Instead of doing it themselves, they were looking for partners.

“We manage everything aside from the people element,” explains Joel. “We found and leased a building, built the bespoke workspace, put in the technology, and managed the facility and IT on an opex basis back to them.”

The business immediately had a good anchor client, and Pivotal Data has built on that. The annuity income has supported further growth.

“This was a base for us, but we’ve acquired a few businesses on the back of this success, and created our own cloud contact centre solution — which also feeds into what we’re doing with OneVault,” says Bruce. “Our vision is to create a technology stack that’s world-class and provides a range of services that no other businesses provide as a single solution.”

Because of this pivot into call centre management, a new opportunity has presented itself, and Pivotal’s ambition has grown to include a solution that calls, authenticates, and then analyses all the data that is collected during those calls.

“Through partnerships, my team has developed a predictive analytics system that gives contact centres deep diagnostic tools. We can predict why agents are having the conversations they have, and what to tweak to improve them. We see the agent’s problem before they do. This isn’t just value add, it’s a revenue generating tool if it improves lead conversion rates and customer service. It’s also all geared to lowering call volumes.

“We know we need to keep looking forward. OneVault is starting to gain real traction, but we need to be working on the next disruptive solution and model. We can’t sit back and relax,” says Bruce.

“Three years ago we said that’s it; no more start-ups or investing in pre-adoption phase businesses. From now on, everything we do will be revenue generating,” says Paul. “We’d stretched three years of runway to five years in OneVault, and we didn’t want to keep doing that. We wanted instant revenue businesses. And the very next thing we did was invest in a start-up. It’s a crazy space, but it’s also very rewarding.”

To sustain it, the group continues to grow, focusing on investing in businesses and entrepreneurs who are subject matter experts and therefore already know and understand the market, and then positioning each new business or service to plug into the current offering.

“Data is our golden thread — technology and the disruptive space,” says Joel.

4. Be open to new ideas and opportunities

pivotal-group-south-africa-founders

Integral to the Pivotal Group’s positioning is Paul, Bruce and Joel’s focus on supporting other business owners whose offerings align with the group’s own growth goals, and who would benefit from joining a group.

“If your goal is to be disruptive, you need to be open to all kinds of new ideas,” says Joel. Some will be better than others, and the co-founders have made the decision to focus on the ‘jockey’ rather than the business as a result. Business offerings and ideas need to pivot. If you have the right partners, finding a solution is all part of the challenge.

Pivotal’s move into the world of artificial intelligence is due to one such partnership. “One of our clients approached us with a concept. But he needed a partner to develop it into a proper AI solution,” says Joel.

It’s an augmented intelligence solution that focuses on recruitment, talent management and career guidance. The solution screens, ranks and matches candidates against a job profile, or a number of profiles. It’s a multidisciplinary platform that predicts the performance of the individual in a role.

“Our partner is a former Accenture consultant and a leader in this field. His focus is on the IP and science of the product, ours is on the business component.”

The challenge is how to commercialise and scale the business in as short a time frame as possible. Like many disruptive products, the adoption process is a stumbling block. “We invest at the pre-adoptive curve — not at the revenue generating stage, which means a big focus is always on how we can take an idea and build it into a revenue generating business,” says Bruce.

The business uses capital selectively. “We want to invest in and drive our own agenda,” says Paul. “We’re in charge of our own destiny, but it’s not comfortable or simple. We came from corporate. Big machines that you need to direct and keep on course. This is an entirely different challenge and we are still learning.”

Related: Listen And Learn: Why Podcasts Aren’t Just For Start-up Founders


Listen to the podcast

Matt BrownMatt Brown interviews Paul, Joel and Bruce and discusses what it’s like to invest in pre-adoptive start-ups and staying ahead of the curve.

To listen to the podcast, go to mattbrownmedia.co.za/matt-brown-show or find the Matt Brown Show on iTunes or Stitcher.

The Matt Brown Show is a podcast with a listenership in over 100 countries and is designed to empower entrepreneurs around the world through information sharing.

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Entrepreneur Profiles

Afritorch Digital An Overnight Success That Was Years In The Making

By any standard, local start-up AfriTorch Digital has seen phenomenal growth and traction. But, while the company’s success might seem quick and effortless, there is a lot of hard work behind it.

GG van Rooyen

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michel-m-katuta-and-thabo-mphate-of-afritorch-digital

Vital stats

  • Players: Michel M. Katuta and Thabo Mphate
  • Company: Afritorch Digital
  • Established: 2017
  • Visit: afritorchdigital.com
  • About: Afritorch Digital assists research agencies in conducting market research through its in-depth knowledge of the African continent and its use of the latest digital technologies.

There is a saying that goes: It takes years to become an overnight success. While a company or individual might seem to enjoy sudden (and seemingly effortless) success, there is often more to the story. The results are usually public and well-publicised, but the years of hard work that came before go unnoticed.

Local start-up AfriTorch Digital is a great example of this. Since launching in May 2017, the business has seen excellent growth. “To be honest, we were very surprised by the level of success. Things progressed a lot quicker than we anticipated,” says co-founder Thabo Mphate.

 “All the goals we had hoped to reach in four or sixth months, we managed to hit in the first month. It was just amazing.”

Related: Edward Moshole Founder Of Chem-Fresh Started With R68 And Turned It Into A R25 Million Business

Preparing to launch

While AfriTorch Digital has certainly seen quick growth and success, it would be a mistake to assume that the same is true of the two founders. For them, the creation of AfriTorch was years in the making.

“The goal was always to start our own business,” says Thabo. “I think we’re both entrepreneurs at heart, and we saw an opportunity to create a unique kind of business that offered an innovative solution to clients, but we also realised the value of getting some experience first. Without the knowledge, experience, network and intimate understanding of the industry landscape, getting AfriTorch off the ground would have been incredibly difficult.”

Entrepreneurs tend to dislike working for other people. They want to forge their own path. However, as AfriTorch Digital’s case illustrates, spending time in the industry that you’d like to launch your business in is tremendously useful.

“Finding clients when we launched AfriTorch was relatively easy,” says company co-founder and CEO Michel Katuta. “One reason for this, I think, was that we were offering potential clients a great solution, but the other was that we had established a name for ourselves in the industry. People knew us. We had worked for respected companies, and we had done work for large clients. So, when we launched, we were able to provide a new start-up with credibility in the industry.”

The Lesson: Becoming an entrepreneur doesn’t always start with the launch of a company. Spending time in an established business, gaining experience and making contacts, can be invaluable. Very often, it’s the relationships you build during this time and the knowledge you accumulate that will help make your company a success.

Solving a problem

Everyone knows that launching a successful business means solving a burning problem, but what does that mean in practice? Aren’t all the burning problems already being addressed? And how do you attempt this without any money?

Thabo and Michel identified a small group of potential clients with a burning problem. Crucially, it was a problem that no one outside of the research field could have identified. Having spent years in the trenches, they saw a massive gap waiting to be filled.

Related: AutoTrader South Africa’s George Mienie Knows Disruptive Innovation Is More Than Shifting Gears

“A decade ago, researchers were still debating whether the future of the field was in the digital space. That debate is now over. Everyone agrees that online is the way to go. What once took months now takes days or hours, and the cost of research can be reduced by a factor of five,” says Michel.

“But researchers are not technology specialists. If made available, they are eager to adopt digital tools, but they aren’t eager to develop these tools themselves. That’s not their area of expertise.”

AfriTorch Digital stepped up to provide these tools. Katuta has a background in software engineering, so he could approach research problems with the eye of a tech specialist. Very soon, research agencies were lining up to make use of AfriTorch Digital’s services.

“We work with research agencies that conduct research on behalf of their clients. We provide the digital tools needed to conduct research online, and we provide the online communities. A big reason for our success is that we understand Africa. A lot of companies want to conduct research in Africa, but traditionally, this has been very hard. There was a lack of access and a lack of infrastructure that made research very hit-and-miss. Thanks to the continent’s adoption of mobile technology, it’s now much easier. If you have the technological know-how and an understanding of the environment, you can do amazing things,” says Michel.

The Lesson: Find a niche and own it. Research agencies might not have seemed like an obvious and lucrative market, but having spent time in the industry, the AfriTorch founders were able to identify clients who would be desperate for their offering. Spending time in an industry will help you see where the opportunities lie.


Take note

Before launching a business, get to know an industry from the inside out. This will give you an unparalleled view into gaps you can service.

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Entrepreneur Profiles

Jason English On Growing Prommac’s Turnover Tenfold And Being Mindful Of The ‘Oros Effect’

Rapid growth and expansion can lead to a dilution of the foundational principles that defined your company in its early days. Jason English of Prommac discusses how you can retain your company’s culture and vision while growing quickly.

GG van Rooyen

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Vital stats

  • Player: Jason English
  • Position: CEO
  • Company: Prommac
  • Associations: Young President’s Organisation (YPO)
  • Turnover: R300 million (R1 billion as a group)
  • Visit: prommac.com
  • About: Prommac is a construction services business specialising in commissioning, plant maintenance, plant shutdowns and capital projects. Jason English purchased the majority of the company late in 2012, and currently acts as its CEO. Under his leadership, the company has grown from a small business to an international operation.

Since Jason English purchased Prommac in 2012, the company has experienced phenomenal growth. At the time he took over as owner and CEO, it was a small operation that boasted a turnover below R50 million.

Today, Prommac is part of a diversified group of companies under the CG Holdings umbrella and alone has grown it’s turnover nearly ten fold since Jason English took over. As a group, CG Holdings, of which Jason is a founder, is generating in excess of R1 billion. How has Prommac managed such phenomenal growth? According to Jason, it’s all about company culture… and about protecting your glass of Oros.

Jason English

Related: 5 Top Lessons From LAWTrust To Prepare For Super-Charged Growth

“As your business grows, it suffers from something that I call the Oros Effect. Think of your small start-up as an undiluted glass of Oros. When you’re leading a small company, it really is a product of you. You know everything about the business and you make every decision. The systems, the processes, the culture — these are all a product of your actions and beliefs. As you grow, though, things start to change. With every new person added to the mix, you dilute that glass of Oros.

“That’s not to say that your employees are doing anything wrong, or that they are actively trying to damage the business, but the culture — which was once so clear — becomes hazy. The company loses that singular vision. As the owner, you’re forced to share ‘your Oros’ with an increasing number of people, and by pouring more and more of it into other glasses, it loses the distinctive flavour it once had. By the time you’re at the head of a large international company, you can easily be left with a glass that contains more water than Oros.

“Protecting and nurturing a company’s culture isn’t easy, but it’s worth the effort. Prommac has enjoyed excellent growth, and I ascribe a lot of that success to our company culture. Whenever we’ve spent real time and money on replenishing the Oros, we’ve seen the benefits of it directly afterwards.

“There have been times when we have made the tough decision to slow growth and focus on getting the culture right. Growth is great, of course, but it’s hard to get the culture right when new people are joining the company all the time and you’re scaling aggressively. So, we’ve slowed down at times, but we’ve almost always seen immediate benefits in terms of growth afterwards. We focus heavily on training that deals with things like the systems, processes and culture of the company. We’ve also created a culture and environment that you won’t necessarily associate with engineering and heavy industries. In fact, it has more in common with a Silicon Valley company like Google than your traditional engineering firm.

“Acquisitions can be particularly tricky when it comes to culture and vision. As mentioned, CG Holdings has acquired several companies over the last few years, and when it comes to acquisition, managing the culture is far trickier than it is with normal hiring. When you hire a new employee, you can educate them in the ways and culture of the business. When you acquire an entire company, you import not only a large number of new people, but also an existing organisation with its own culture and vision. Because of this, we’ve created a centralised hub that manages all training and other company activities pertaining to culture. We don’t allow the various companies to do their own thing. That helps to manage the culture as the company grows and expands, since it ensures that everyone’s on the same page.

“Systems and processes need to make sense. One of the key reasons that drove us to create a central platform for training is the belief that systems and processes need to make sense to employees. Everyone should understand the benefits of using a system. If they don’t understand a system or process, they will revert to what they did in the past, especially when you’re talking about an acquired company. You should expect employees to make use of the proper systems and processes, but they need to be properly trained in them first. A lot of companies have great systems, but they aren’t very good at actually implementing them, and the primary reason for this is a lack of training.

“Operations — getting the work done — is seen as the priority, and training is only done if and when a bit of extra time is available. We fell into that trap a year ago. We had enjoyed a lot of growth and momentum, so we didn’t slow down. Eventually, we could see that this huge push, and the consequent lack of focus on the core values of the business, were affecting operations. So, we had to put the hammer down and refocus on systems, processes and culture. Today Prommac is back at the top of it’s game having been awarded the prestigious Service Provider of the year for 2017 by Sasol for both their Secunda and Sasolburg chemical complexes.

Related: Establishing The Wheels Of Change In Business

“If you want to know about the state of your company’s culture, go outside the business. We realised that we needed to ‘pour more Oros into the company’ by asking clients. We use customer surveys to track our own performance and to make sure that the company is in a healthy state. It’s a great way to monitor your organisation, and there are trigger questions that can be asked, which will give you immediate insight into the state of the culture.

prommac

“It’s important, of course, to ask your employees about the state of the business and its culture as well, but you should also ask your customers. Your clients will quickly pick up if something is wrong. The fact of the matter is, internal things like culture can have a dramatic effect on the level of service offered to customers. That’s why it’s so important to spend time on these internal things — they have a direct impact on every aspect of the business.

“Remember that clients understand the value of training. There is always a tension between training and operational requirements, but don’t assume that your clients will automatically be annoyed because you’re sending employees on training. Be open and honest, explain to a client that an employee who regularly services the company will be going on training. Ultimately, the client benefits if you spend time and money on an employee that they regularly deal with.

“For the most part, they will understand and respect your decision. At times, there will be push back, both from clients and from your own managers, but you need to be firm. In the long term, training is win-win for everyone involved. Also, you don’t want a client to become overly dependent on a single employee from your company. What if that employee quits? Training offers a good opportunity to swop out employees, and to ensure that you have a group of individuals who can be assigned to a specific client. We rotate our people to make sure that no single person becomes a knowledge expert on a client’s facility, so when we need to pull someone out of the system for training, it’s not the end of the world.

“Managers will often be your biggest challenge when it comes to training. Early on, we hired a lot of young people we could train from scratch. As we grew and needed more expertise, we started hiring senior employees with experience. When it came to things like systems, processes and culture, we actually had far more issues with some of the senior people.

“Someone with significant experience approaches things with preconceived notions and beliefs, so it can be more difficult to get buy-in from them. Don’t assume that training is only for entry-level employees. You need to focus on your senior people and make sure that they see the value of what you are doing. It doesn’t matter how much Oros you add to the mix if managers keep diluting it.”

Exponential growth

When Jason English purchased Prommac late in 2012, the company had a turnover of less than R50 million. This has grown nearly ten fold in just under five years. How? By focusing on people, culture and training.

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